Quote of the Day -- Richard Edelman

In this period of information bankruptcy and instability, business has to be a primary source of objective facts, a catalyst for change and a standard-bearer for universal values.

-- Richard Edelman

Quote of the Day -- Kenichi Ohmae

Rowing harder doesn't help if the boat is headed in the wrong direction. 

-- Kenichi Ohmae

Emerging from Hibernation

Our president has foolishly floated the idea that our economy can be roaring again by Easter (just a few short weeks away). Public health officials are horrified but trying to temper their responses to avoid an unequal but opposite over-reaction to their advice. But to the president's credit, he has at least started a conversation about how we begin to get back to normal when the time is right.

Economists write that our economy was very strong going into this crisis, and it is logical to assume it will bounce back to a strong position. But I started to think about this on a micro-level, from the perspective of one company that I know and love. Emerging might, in fact, be very challenging. For some organizations, it might feel very much like starting over.

I mentioned in a previous COVID-19 post that our favorite travel company, Overseas Adventure Travel, canceled all trips departing in March and April. Based on the current state of affairs around the world, I think it is more likely to be July at the earliest, before anyone even thinks about international travel.  So, that means OAT will have been essentially closed for at least 4 months. With a stretch like that, resuming trips is by no means a trivial exercise.

Let's take the example of a trip we're considering in the future to Tunisia. It's a pretty typical OAT trip, 16 days long, including the two over-the-ocean travel days. The issue for OAT becomes how quickly they can reassemble all the elements that it takes to make this trip a success. How many of the people and organizations that they rely on are still in business and available? Here's what's needed:

• One flight on a domestic airline
• Two buses with drivers; one for 12 days from Tunis to Djerba; another in the vicinity of Tunis for 2 days
• 5 hotels, most for several nights -- ~16 travelers, including several singles, probably translates to 11 hotel rooms
• Most meals are provided -- so assume 10 locations for lunch and 10 locations for dinner
• A high-quality Trip Experience Leader
• Local guides for some cities
• And the activities -- museums, visits to local artisans, schools, markets

As a tour company with a reputation for high quality experiences, OAT will have challenging decisions to make. They need revenue, obviously. They want to start working with all their foreign vendors as soon as possible to provide them with revenue as well. And people (at least some people) will be eager to travel as soon as it seems feasible. But how many of the pieces of the previously well-designed trip need to be in place before they are willing to run the trip again? How do they balance speed versus quality and preserve their reputation and their livelihood?

This is just one example that I can envision because of personal experience. Now multiply that by all the different businesses that will be trying to emerge from hibernation. It's a complex set of interdependencies that might be very challenging to manage well.

Quote of the Day -- Adam Smith

The things which have the greatest value in use have frequently little or no value in exchange; on the contrary, those which have the greatest value in exchange have frequently little or no value in use. Nothing is more useful than water: but it will purchase scarcely anything; scarcely anything can be had in exchange for it. A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it.

– Adam Smith

 

Quote of the Day -- Jack Welch

On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy…your main constituencies are your employees, your customers and your products.

-- Jack Welch

Quote of the Day Malcolm Forbes

Anyone who says businessmen deal in facts, not fiction, has never read old five-year projections.

-- Malcolm Forbes

Quote of the Day -- Edward G Ryan

The question will arise and arise in your day, though perhaps not fully in mine: Which shall rule — wealth or man? Which shall lead — money or intellect? Who shall fill public stations — educated and patriotic freemen or the feudal serfs of corporate capital?

-- Edward G Ryan

Quote of the Day -- John Maynard Keynes

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.

-- John Maynard Keynes

Quote of the Day -- Warren Buffett

Price is what you pay. Value is what you get.

-- Warren Buffett

Knowledge for the Sake of Knowledge -- A Thing of the Past?

At first reading, a recent Forbes article, "What Happens When Business Starts Accrediting America's Colleges," seems quite reasonable. The impetus for the article is a new report by the US Chamber of Commerce Foundation. The report criticizes accreditation as “operated by higher education for higher education” rather than as a quality measurement in tune with the needs of employers and would-be employees. The report sites a recent survey that only 11% of business leaders believe college graduates are equipped for entering the workforce. 

Self-evaluation as the primary means of measuring success certainly seems like a flawed system. But the Chamber proposes that because this measurement is most probably not sufficient, it should be completely abandoned in favor of an alternative.

According to Forbes, "The report argues that higher education should use the principles of supply chain management, with colleges and employers working together to develop performance measures to assure that graduates have the workforce skills they need."  Hmmm... So as an alternative to the status quo, we're turning colleges into trade skills for business to completely free them of any need to train employees on the job?

I'm both the proud and reluctant owner of liberal arts degree. I relish the cultural literacy and critical thinking skills that I acquired in college and graduate school. At the same time, I bemoan the complete lack of practical skills that I possessed when I graduated. I was fortunate that "back in the day," IBM was hiring liberal arts majors and training them. Something unheard of today. My fellow liberal-arts colleagues and I quickly learned the necessary skills both in training classes and on the job. We weren't crack accountants by any means but it wasn't that hard to learn the basics of creating or analyzing a balance sheet and income statement. And my previously little-trained logical mind took to programming like a fish to water. Plus, we came to the table with a depth of knowledge, flexibility, and agility of mind that our business-major colleagues were challenged to match. Businesses today say that they value innovative thinking and flexibility, but how do you measure those things (or develop them) in the supply chain that the Chamber is proposing.

[Disclaimer: My higher education coincided with the Viet Nam era, when business was a "jock major" and the best and brightest chose fields of study that were frowned on by the "military industrial complex." So perhaps the comparison above is a bit unfair.]

With the mushrooming costs of higher education, parents and students alike feel compelled to ensure that a good paying job awaits. But does that have to mean that colleges become trade schools? Whatever happened to aspiring to cultural literacy that was so in vogue after the publication the book by of E.D. Hirsch, Jr? We learn so much from a good historical novel, but who will be the authors in the next generation if our best minds are trained to meet the specs of the business supply chain?

Despite the dynamics of this era of polarity and intense distrust between academia and business, I think a compromise is in order. Economics and competition dictate that the majority of our graduates have some employer-ready skills. But employers also need people to be innovative, adaptable, self-motivated, and, let's face it, just plain interesting. What we need is a well-rounded curriculum with both breadth and depth that teaches students to think and to do along with a joint measurement system that evaluates a broad spectrum of capabilities.